Market Direction Model - Model switches to BUY on May 18, 2015

Published : May 18 2015 at 14:00 ET
MDM switches to a BUY signal. 

Major averages have been trading in a tighter price construction, the percentage of bulls had been declining, and a number of stocks have been acting better, shaping out the right side of their bases, along with the number of actionable names as of late. Plus, the market has had a tendency to find shallow floors then move higher.

The unemployment report also came in favorably with unemployment at 5.4%. While this number is suspect, perception rules the day as fund managers struggle to keep up with their benchmarks. And while a strong unemployment report implies the Fed may act to raise rates sooner as conventional wisdom assumes markets will tank on the first rate hike, the market is first guided by a recovering economy, and history indeed shows the first rate hike often coincides with sustained bullish market action. That said, the economic recovery may still be further out, in which case QE will continue to rule the day, pushing reluctant markets higher in sloppy fashion. 

Suggested ETFs (Note: Many members buy the standard ETFs or their preferred ETFs. This list serves as a guide as to which ETFs we think may outperform, but the key point is to be on the right side of the market regardless of which ETF or ETFs one chooses.)


SPY (S&P 500) (Lower risk, lower reward)

QQQ (NASDAQ-100) (Higher risk, higher reward)


SSO (S&P 500)



UPRO (S&P 500)


NOTE: Investors may wish to become acquainted with the full range of available ETFs, and should make an effort to understand how these ETFs are created and what their components are, as well as being aware of the downside risks involved, especially with leveraged ETFs. Certain ETFs may be more appropriate depending on one's risk tolerance levels. Typing in keyword 'ETF' into the FAQ keyword search bar or going here and visiting this site can be instructive.

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